Digital developments and employment : understanding trends in Africa

Abstract

The main focus of this book is to determine the effects of digital developments on inclusive growth, and specifically employment, in Africa. The reason for the chosen focus of the manuscript is that there is a broad consensus in the literature that job creation is a crucial element in growing an economy and that the digital era could be an important driver in this regard, especially in the African context where there are high levels of unemployment. However, while the digital era has the potential to expand and/or accelerate employment on the continent, it also poses risks. It is therefore important to find out what these opportunities and risks are so that they can be translated into well-informed policies and strategies. This research is innovative and contributes to the economics discipline as there is no well-established, empirically determined relationship between digitaldevelopments and employment in Africa, which can make policymaking difficult. The book addresses this research gap, giving due cognisance to the different levels of development of African countries. Another original feature of the study was its empirical research methodology. Firstly, for the regression analysis, the study used two digital trade variables (for services and goods, respectively) in recognition ofthe influence of Africa-focused and international trade on domestic employment. Secondly, it disaggregated the employment-related results according to sector (i.e. agriculture, industry and services sector employment) and gender (i.e. female and male employment). Thirdly, it presented the results across country income groups (low-income countries, lower middle-income countries and upper middle-income countries), according to the World Bank’s classification system, to reveal how the results and evident trends might differ from one group to the next. The contribution of this study lies in the formulation of expected results, which were drawn from existing literature, and the comparison of these with the actual results from the regression analysis. The results showed that the effects of digital developments on employment in Africa are highly contextual. For example, the industry and services sectors in Africa are more digitally prepared than the agricultural sector. The resilience of industry and services sector employment in the face of advancing digitalisation is somewhat surprising and warrants further investigation to determine how support to these sectors can be optimised. The fact that agricultural sector employment is lagging behind the other two is not surprising but is very concerning – particularly as agriculture holds the key to food security onthe continent and could play a leading role in an agro-processing industrialisation drive. The empirical study used a quantitative research methodology to examine the relationships between certain dependent (employment) variables and certain independent (digital development) variables. A longitudinal method was selected, using panel data regression, which allowed the dataset to be observed multiple times over a 20-year period. This book represents a reworked version (more than 50%) of the dissertation of one of the authors, titled ‘Determining the links between digital developments andinclusive growth: Implications for Africa’, submitted in fulfilment of the requirements for the degree Master of Commerce in International Trade, in the School of Economic Sciences, Faculty of Economic and Management Sciences at North-West University, South Africa, 2022, with Prof. W Viviers as promoter and Dr SJ Jansen van Rensburg and Dr E Orkoh as co-promoters. The material has been substantially reworked, and new sections have been added to provide a fuller context and amore balanced and well-rounded contribution to the literature. The authors confirm that no part of the work has been plagiarised. The target audience of the book is fellow scholars in the development economics discipline who have an interest in policy studies and in gaining a holistic appreciation of the nexus between digital developments and employment in Africa, based on qualitative and quantitative research.